Diversification is key to managing risk in mergers from "summary" of Merger Masters by Kate Welling,Mario Gabelli
It is widely acknowledged that mergers can be a risky business. In the high-stakes world of corporate deal-making, there are countless factors that can influence the success or failure of a merger. One of the most critical considerations in this regard is the concept of diversification. Diversification is the practice of spreading out investments or risks among a variety of different assets in order to mitigate potential losses. In the context of mergers, diversification is essential for managing risk effectively. By diversifying their portfolios, companies can protect themselves from the negative impact of a single failed merger. When a company puts all its eggs in one basket, so to speak, it becomes highly vulnerable to the specific risks associated with that particular merger. If the deal falls through, the company may suffer significant financial losses and damage to its reputation...
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